Hiya!
I'm happy with the shape of my portfolio for long-term stock investments. I have a decently diversified portfolio with carefully picked stocks I think will be long-term winners (1 to 5 years). But I'm bearish on the rest of the year for the broader stock market. I think higher interest rates aren't (fully) priced-in to the market, and I think this jubilant 2023 stock market is going to recede into the background as the reality of bad earnings and higher interest rates set in.
I have cash, and am looking for ways to invest that profit off my prediction that the rest of the year will feature declining indices. I have never bet against the market before, so this is new to me, and I'm struggling to figure it out.
The first thing I looked at were put options. I picked a few stocks I don't like for the rest of 2023: Redfin and OpenDoor Technologies in the real estate sector, and manufacturers of expensive-ish EVs like Rivian and Lucid. I priced out put options, but felt it was too much risk for me. Why?
First, the put options feel like they reward you for short-term volatility. I want a longer term outlook than 30/60/90 days.
Second, picking anti-stocks is scarier for me than finding long-term investments. I found myself thinking a lot of: “What if I'm wrong? What if the broader market is down, but US government incentives mean Rivian or Lucid do well, even as consumers start to actually feel pain? Or what if Redfin should tank, but doesn't, because higher interest rates take time for home buyers to feel pain?”
Finally, If I'm wrong about stocks I'm going long in, the decline is generally slow or perhaps predictable, and I can get out with a small-ish win or loss. If I'm wrong about a put option, it feels like I'm going to lose everything I put in.
The next think I looked at was inverse ETFs. I know almost nothing about them, so I've been doing some reading. And everything I'm reading says they're for very short term investing (like, daily settlement) because over the long term, an inverse ETF will always be a loser. That seems like the opposite of what I'm trying to do, so no inverse ETFs?
Now I'm lost.
I think the market will be lower at the end of 2023 than it is today. I'm not sure which indices will be better or worse than others, but I have cash and am willing to bet against all of them if I can find vehicles for doing so. I tried searching this subreddit, but didn't find a whole lot of strategies except about inverse ETFs. (My favorite was the anti-Jim Cramer ETF, SJIM. LOL. And a lot of chatter about betting against Cathie Wood, of course.)
Thoughts, comments, advice welcome, and thank you!
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